The following is a guest article by Carol Howard, Vice President of Clinical Content, EvidenceCare.
When a patient presents to an emergency department (ED) and requires further treatment, the physician must assess whether the patient should be admitted. In a busy ED where physicians see a broad cross-section of conditions, the initial decision to admit to inpatient versus observation status seems intuitive but has become increasingly complicated. This one decision can have significant ramifications on the hospital’s bottom line.
The problem stems from insufficient evidence-based documentation with which to support the level of care (LOC) decision. Without that insight, hospitals face increased denials for a variety of reasons -especially medical necessity related to LOC—not to mention lack of authorization at time of admission. These denials negatively impact the patient, physician and the hospital’s bottom line.
This is especially problematic as hospitals grapple with the COVID-19 pandemic. As we’ve learned over the past few months, COVID patients presenting with multiple co-morbidities make care decisions even more complex. And managing the COVID-19 claims process will be just as complex with the uncertainty of when to bill through the CARES Act, when to bill through the payer, or when to bill the patient. And this uncertainty is likely to increase denials and put even greater pressure on a hospital’s bottom line.
DENIALS ARE ON THE RISE
Payers today are denying a record number of claims, especially Medicare and Medicaid. While the average denial rate tends to hover around 11%, some payers—especially ACA Marketplace plans—deny one in every five in-network claims. Across all insurers, rates range from 1% to more than 40%.
Denial-related write-offs increased 90% from 2011 to 2017. –Source
The cost of those denials adds up. A 2016 study of 3.3 billion provider transactions across 724 hospitals found that up to 3.3% of net patient revenue was at risk due to denials. The cost is $262 billion, or $4.9 million per hospital. The study found that while 63% of denials are recoverable, the rework to appeal those denials was a staggering $8.6 billion, or $118 per claim.
One reason denials have increased is that payers are using more sophisticated algorithms to identify things like medical necessity issues and potential DRG downgrades. They’re also adding more complex criteria on top of what the CMS recommends.
Nearly 40% of all denials are due to issues with medical necessity, authorizations, pre-certifications, medical documentation, or service coverage. –Source
PREVENTING DENIALS BY ALIGNING CLINICAL DECISIONS WITH PAYER CRITERIA
To prevent denials, providers must take a more proactive approach—one that begins with the initial decision to admit whether by the ED physician or Hospitalist and uses evidence-based admission criteria built into the workflow through the EHR. While most revenue cycle and EMR vendors offer a basic solution using payer criteria, they don’t go far enough.
Providers need access to clinical indicators for more effective review of utilization and documentation of medical necessity, and for more informed decision-making at the point of admission. The Admission Criteria solution from EvidenceCare, an industry leader in advanced clinical decision support (CDS) technology, and MCG, a leading provider of informed care strategies, gives providers the ability to do just that.
MCG has a team of clinical editors that analyzes and classifies peer-reviewed papers and research studies to develop care guidelines that align with evidence-based medicine. These guidelines are transformed into interactive, actionable content made available through the EvidenceCare platform to providers at the point of care, giving them the ability to make the most informed decisions for patient care while ensuring hospitals are properly paid for that care.
A MORE EFFECTIVE REVENUE CYCLE
The ED is the gateway to the hospital and clinicians in the ED are the primary driver of the revenue cycle. In a time when hospitals are struggling with reduced reimbursement, paper-thin margins, and the COVID-19 pandemic, they need a more effective way to protect their bottom line. By leveraging an evidence-based admission criteria solution, hospitals can decrease denial rework costs, reduce write-offs, improve outcomes, and enhance patient satisfaction.